Billionaires are getting older, just like their fellow baby boomers.
A report from UBS Group AG and PwC found that the rapid rate of wealth creation by billionaire entrepreneurs will probably level off over the next two decades. It cited slower economic growth in emerging markets and the growing share of billionaires headed for retirement.
More than two-thirds of 1,300 billionaires surveyed are now over 60 years old and have more than one child, which may act as a brake on wealth creation, the study said. With their careers nearing an end, many billionaires are looking to preserve wealth and transfer fortunes to the next generation.
“The higher you get up the ladder of wealth the more important the business focus and family and philanthropic activities become,” said Joe Stadler, UBS wealth management’s head of ultra-high net worth clients. On billionaires’ “mind is how to create a legacy.”
Banks including UBS and Credit Suisse Group AG have their sights on winning more clients from the ranks of the very rich. The report analyzes data from existing studies to find trends in 14 countries accounting for 75 percent of billionaire wealth.
“Just as economies grow in cycles, so the opportunities that led to this most recent exceptional period of wealth generation are likely to end,” according to the report. Taxes, social equality initiatives, asset price deflation and geopolitical tensions such as civil wars also “will likely have significant consequences for great wealth creation,” it said.
Gilded Era Ending
UBS, the world’s largest manager of money for the rich, and PwC found that 917 self-made billionaires accumulated $3.6 trillion of wealth in the past 20 years. The authors compared the period straddling the end of the 20th century with the “gilded age,” when a few businessmen built fortunes from cars, steel and electricity 100 years earlier.
Most growth in recent years occurred in the U.S., where fortunes were made in finance and technology, and Asia, where the consumer industry and real estate pushed the number of billionaires in the region past Europe. Since 1995, the portion of billionaires’ total wealth held by entrepreneurs increased to two-thirds from less than half, according to the study.
Hard Workers
Apart from being coveted clients for the banks, many of the self-made billionaires covered by the report work in financial services. In the U.S., 30 percent of self-made billionaires come from the financial industry, compared with 27.3 percent from the field of technology. Tech billionaires are richer, however, with fortunes averaging $7.8 billion, compared with $4.5 billion for financiers, the study found.
By contrast, half of Europe’s and 20 percent of Asia’s self-made billionaires built their fortunes in the consumer industry in the last two decades.
UBS and PwC researched available data and conducted interviews with 30 billionaires to find common personality traits. Billionaires share an appetite for clever risk-taking, an obsessive focus on business and a strong work ethic, the report said.
“While some highly visible entrepreneurs excel in risk- taking and starting up businesses, they are often less good at running and scaling a business,” the report said.
–With assistance from Margaret Collins in New York.